Can someone more adult than me tell me about where I should be putting my savings? I have a healthy amount sitting in my checking account untouched and plan for it to grow. A few hundred in cash hidden around my house for emergency. What should I do with my savings? What’s a savings account? No one ever taught me these things.
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I think I will go to the bank this weekend. I am just afraid I’ll be persuaded into make a mistake with my money. I’m so oblivious to everything.
@thatrealuniverse we did it over a year ago and I think it's actually 5.25%. There are different terms but once you choose which term, the money is locked in as well as the interest rates.
If you pull from it, then it is taxed. I think you can pull 10% or less per year and not get taxed.
This is dumb. But….why would people pull from it? Emergencies usually?
If you're in the double digits in savings, check out annuities. Your money sits in an account at a locked in interest rate and makes money while it sits there. The higher the amount you have and the higher the rate, the more you will passively make.
I heard this is taxable though? Is it true? What does that mean?
Do you have any debts you pay interest on? Are you maximizing your 401k match at work? I think the answers to these questions will help us with giving advice. :)
@mybabybear I think one is taxed when you put the money in and one is taxed when you take the money out, and taxing it now rather than later is better because theoretically taxes will likely be higher in 30 years, not lower. Do they match your contributions?
@jenx, I’m looking and I’m not seeing anything that they do. What if they don’t?
@mybabybear if they don't, you would want to diversify your investing more. Money put into an account like this is very important, but you can't take it out without a penalty until you're 59 1/2 or something like that. You basically want to have about 6 months of living expenses saved and then start to put your money where it's going to gain interest and work for you.
Yeah, or if you want to buy something that's expensive (car, etc) but ideally you let it sit the entire term and then it exponentially builds money. You'll have to ask your bank about if it's right for you, what the current rates are, etc. We have one for a 5 year term locked in at a 5% so, it's making decent money for us.